Lok Sabha passes bill to amend companies law

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New Delhi: A civic worker sweeps a lawn in the premises of Parliament House during the ongoing Monsoon Session, in New Delhi, Tuesday, Sept. 15, 2020. (PTI Photo/Kamal Kishore)(PTI15-09-2020_000029B)

Lok Sabha on Saturday passed a bill to further amend the Companies Act and decriminalise various non-compoundable offences and promote ease of doing business.

The Companies (Amendment) Bill, 2020 — which seeks to decriminalise various penal provisions and introduce a new chapter related to producer organisations in the legislation — was passed by the Lower House.

Speaking on the bill, Finance and Corporate Affairs Minister Nirmala Sitharaman said decriminalisation of various provisions under the companies law will also help small companies by reducing litigation burden on them.

Around 48 sections of the Companies Act, 2013 will be amended to decriminalise various offences.

Sitharaman said there are currently around 124 penal provisions compared to 134 in 2013 under the Companies Act.

Stressing that there will be no relaxation for serious offences, including fraud and those that cause “injury to public interest or deceit”, the minister said the number of “non-compoundable” offences under the Act remains the same at 35.

Generally, compoundable offences are those which can be settled by paying certain amount of money.

There will also be a new chapter on producer organisation, the minister said, adding that it will be particularly helpful for farmer producer organisations.

For promoting “ease of doing business,” the minister said that 17 provisions will be amended.

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